The telecoms group BT will this month pay £2bn into its pension fund, the largest private sector scheme in the UK, almost halving its deficit.

The payment is part of a nine-year plan that aims to wipe out the shortfall over the next decade.

The last triennial fund valuation put the deficit at £4.1bn at the end of June, less than half the £9bn hole recorded in 2008.

BT, which has been dogged in recent years by the pension fund deficit and the drag it placed on dividend payouts, has thrashed out a deal with its trustee. It will make a lump sum payment of £2bn before the end of March, followed by nine smaller payments of £325m in March of each year until 2021.

This compares with a previous plan that ran for 17 years in which BT pumped an extra £525m a year into the fund over three years, which would then rise to annual payments of £583m. However, the telecoms company admitted in 2010 that the pensions watchdog had "substantial concerns".

Shares in BT were the biggest riser on the FTSE100 index when it opened on Friday morning, climbing almost 4% to 229p.

BT's chief executive, Ian Livingston, said: "I am pleased that we have been able to reach an agreement with the trustee. This agreement under which the company makes an immediate contribution to the scheme of almost half of the deficit reflects BT's financial strength and reaffirms our commitment to the scheme.